That's exactly what I wanted done (install a small, no more than 5 gallon, hot water heater but for some reason due to space and other plumbing & wiring issues that seemed not to be such a great idea. Although at that price, I can't imagine why not. I did find information about something called a Hot Water Heater Scale Inhibitor System (sold at www.plumbingsupply.com along with the Chronomite Instant-Temp Tankless Electric Water Heaters, which is what we have). Anybody have any experience with that unit?

Code requires that both the water heater PRV discharge line and the furnace condensate line must either terminate to free air outside the structure or into an approved "indirect waste receptor" The termination point of a PRV discharge line must point downward. When extending a pipe through a footer wall we must install a 90deg elbow on the end of the line to turn it downwards. (This is to minimize the risk of scalding water spraying out of the line and hitting someone standing near the point of discharge) Under the IRC when terminating outdoors the line must terminate within 6" of finished grade. Under the UPC it must terminate between 6" and 24" above finished grade. When terminating into the house DWV system or a storm drain system such as you have the PRV line must terminate a minimum of 2" above the flood level rim of the drain receptor, whether that is a floor drain, utility sink or a sump vessel. (The intended purpose of the 2" air gap is to prevent bacteria from entering the line and potentially going up the line and into the heater vessel.) In your case, you could install a tee on the storm drain line and stub a section of the storm drain up slightly above grade, then mount your PRV discharge line pointing down into the open standpipe. Just make sure that the bottom of the PRV line is 2" above the highest level of the riser from the tee. (Note, your 4" line is a storm drain therefore you are not required to install a P-trap below the riser.)

The point of a tankless water heater is to have a continuous supply of hot water that, unlike a standard water heater, will not run out. It can only provide instant hot water if the tank is at the point of use. There is nothing magic about it that will repeal the laws of thermodynamics and fluid flow. If there are many feet of piping that the heated water needs to run through, particularly if some of the run is in unheated space, there will be the type of lag you are describing. This is because the heated water has to displace whatever cool/cold water has been sitting in the pipe, and because that heated water will also will lose a lot of heat to the cool piping until that piping gets to be about the same temperature as the hot water. Only when the sitting water has cleared and the piping is heated up will you get water coming out at the temperature you want. This is not unique to tankless units...it's true of any type of water heating system where the heated water has to travel a bit before it gets to the point of use. If you want hot water faster, you'll need to move the tankless unit much closer to where you are using the water.

riellebee So I'm going to rough-in some numbers: Range: 15k btu/h Fireplace: 80k btu/h Furnace: 75k btu/h (x2) = 150kbtu/h water heater 200k btu/h (x2) = 400k btu/h Total potential load: 645k btu/h - again, an estimate. You can check your furnaces if you want to be be sure. is it likely that you would have enough things on at the same time to exceed your 425k btu/h service? - Yes, it's quite likely. What happens when you exceed the capacity of the service? The gas pressure drops and the range and the gas logs will just not run at full capacity - no big deal. But the things like the furnace and water heaters will throw error codes showing low gas pressure. The water heaters are likely to have that problem anyway, because at 30' of 3/4" pipe they are only getting about enough gas to run one of those heaters full tilt (the water heaters are variable input). The meter may be 20' away, but in actual length of pipe it's probably close to 30' including elbows. I can see close to 10' of pipe in the photo. The fact that the return line for the circulation isn't warm suggests it's not working. Fix that and insulate your pipes and your immediate problem will probably go away. BTW: Insulating the pipes is not expensive or difficult. Foam pipe insulation comes in 4' sections that just snaps around the pipes and uses self adhesive strips to hold it closed. It cuts with scissors. Even if you just did the exposed pipes in the basement you would reduce a lot of heat loss. My guess is that the builder can't really fix the "over-subscribed" gas service at a reasonable cost. One solution is to use a different water heater. A hybrid tank/tankless would solve the problem. The link goes to an AO Smith Vertex 75 gal water heater 100k btu/h and is 92% efficient and vents with the PVC vent pipe you have. I'm not particularly endorsing that brand - just using it as an example. It would provide you with plenty of hot water (you could run 1 shower continuously) and would reduce your BTU load by 300k BTU/h (gas service problem AND undersized gas pipe to water heater solved). In addition, because it's a tank of hot water - along with about 6' of hot water in the pipe - your wait would be significantly reduced even without a circulation pump. It sucks for your builder because it would cost them about $3500-4000 to fix it. They could probably realize some salvage value from the tankless heaters - say $1000-1500. But If they are only out $2-3k total I'd say they should consider themselves lucky.